Baby Boomers: Will They Be Able to Afford Their Parents?

Do you worry about whether your aging parents have their "affairs in order?" You should. After all, you're the one who will have to pay unnecessary taxes and endure time-consuming court procedures if your parents don't have an effective estate plan. Without some forethought on their part and your part, you could be facing a lot of wasted time and money in addition to a lot of frustration. All of the waste and frustration can easily be avoided.

Experts predict $10 trillion will be transferred in the next two decades from parents to baby boomers. The average inheritance will be $200,000. The parents have spent all of their lives saving to leave something to their family. For most boomers, their inheritance will be the largest single financial transaction most they will ever handle. Depending upon the planning done today, the amount actually transferred could be doubled.

During the final years of a parent's life, the family can lose a lot of the estate in rest home expenses or legal fees. Too often the family has to get a court order to have a parent declared incompetent and get permission to manage their affairs. After both parents die, probate will eat 2-5% of the estate, and estate taxes can take another 37-50%. Additionally, the estate mess can take many days of time out of the boomer's busy life. Not only money is lost, but life styles often have to be altered just to work through the mess.

Good planning is worth every effort made and every dime spent, not just in the money and timesavings, but also in the peace of mind it will give to both the parents and the kids. Boomers need to help get the planning done. However, discussing money, especially in this context, is very unpleasant for most families. The kids don't want to appear grabby or look like they are just waiting for their parents to die so they can get their inheritance. The parents don't want to face their own mortality, and they don't want the kids nosing in their financial affairs. The bottom line is nothing gets done.

The sooner this discussion takes place the better. Everybody has to recognize that planning is good business and financial management. The parents have an obligation to take care of it for the children's sake, and the children have an obligation to help their aging parents. The discussion will take place at some point. The worst time to have the discussion is when a parent is in intensive care.

The following six tips will help protect a parent's hard-earned money, transfer the maximum amount of inheritance to the family, and ease the family's legal and emotional burden.

1. Review current wills and/or living trusts. Do the documents reflect the parent's current wishes? Have there been changes in family relationships, such as divorces, marriages, or new grandchildren?

2. Look into living trusts. All wills that transfer property must go through a court process called probate. Probate eats time and money ? lots of both. Today, many families use living trusts to avoid probate, reduce legal fees, and pay the least possible taxes. Living trusts work well, provided they are handled properly during the parent's life. Is the living trust being used properly?

3. Dodge family disputes. Make sure either the will or trust distribute personal items with a list describing the item and the intended recipient. Most states allows distribution of personal items through a "personal letter," which is just a list of items and their intended recipient. The letter is not part of the will until death, and then it essentially becomes part of the will. Thus, the letter can be rewritten or updated as often as desired without a trip back to the attorney. The letter must be "authorized" by the individual's will in order for it to be effective. If specific distribution of personal items like the shot gun, wedding ring, and the family stamp collection is made in the letter, family fights will be avoided.

4. Split trusts to save taxes. If mom and dad have over $1.5 million in their estate, including the life insurance, retirement money, and business, they should either have an individual trust for each or have a trust that "splits" into two trusts when the first one of them dies. This shields up to $3 million from estate taxes that eat away at a family's wealth.

5. Protect life insurance. Life insurance is taxed. The family doesn't have to pay income tax on the money they get, but the money is taxed in the departed loved one's estate and the IRS will routinely take up to 50% of it. A living trust can help in smaller estates, and an irrevocable insurance trust can totally eliminate the tax in bigger estates.

6. Solve the incompetency problem. Use a durable power of attorney to transfer power to someone when the parent can no longer take care of their own business affairs. The power of attorney has to have language in it that states it will endure the incompetency of the individual making the power of attorney. With the power of attorney, there isn't any need to have the parent declared incompetent and have a court appoint a guardian. It removes a lot of frustration.

The parents need to soften up and realize that estate planning is something they need to talk about and be taking care of. If they cannot do it for themselves, they need to realize that their children are the ones that they have to turn to. The boomers need to take their parents' estate planning very seriously. The boomers have a lot at stake ? a lot of money, a lot of time, and a lot of frustration.

Attorney Lee R. Phillips is a nationally recognized expert in the field of finance, estate planning, and asset protection. Lee is licensed to practice law before the United States Supreme Court and also holds licenses in insurance and securities. Lee is an engaging, dynamic speaker and has spoken to over a half million people throughout the United States, Canada and the Pacific Rim helping them understand the law and how to use it to their benefit.

His goal is to reposition you in the law so you can actually use the law to make more money, and keep it! His ability to present critical information in a clear manner has made him a highly sought after guest on hundreds of radio and television shows.

His specialty is in creating easy to understand, do-it-yourself legal systems. For more information, visit http://www.DIYestateplanning.com.

---

New Hope for Alzheimers Treatment

There is now widespread agreement among research scientists and medical... Read More

Caregiving Across The Miles?Tips for Successful Long Distance Caregiving

Caring for a parent or a loved one is a... Read More

Arizona Assisted Living: Resident Rights

According to the Arizona Administrative Code (R9-10-710), those who reside... Read More

Exercise Walking For Seniors: Preventing Foot Problems

Exercise has a very important role in the general health... Read More

Who Wants to End Up in a Nursing Home? NO ONE!

As a long-term care consultant for seniors and their families... Read More

What About Tennesse Dept. of Human Services Abuse of the Elderly and Their Families?

PART I: Physical Abuse of the Elderly vs. Tennessee DHS... Read More

Baby Boomers: Will They Be Able to Afford Their Parents?

Do you worry about whether your aging parents have their... Read More

Retiring Abroad and Leaving the Grey Skies of the UK

Retiring abroad needs careful planning. Not all countries have the... Read More

What Colour was Your Great-grandmothers Hair?

I've just made another Photoshop video. This one is about... Read More

Local Businesses Serving Seniors Prove Commitment to Quality Care

Good news! You no longer have to risk chance when... Read More

Long Term In-home Care Options

Are you worried that you may lose all your life's... Read More

Arizona Assisted Living Homes -- The Alternative to High Priced Senior Care

The cost of skilled nursing care is slowly rising. Currently,... Read More

What You Need to Know About Helping Senior Citizens

IntroductionThe baby boomers is the population which haven taken birth... Read More

As the Baby Boomers Age

Many employees today are calling in sick - not to... Read More

Assisted Living: Tips on How to Choose a Facility

It is easy to be fooled by fancy drapery or... Read More

Stair Lift Buying Guide

There is no doubt that having a stair lift in... Read More

The Golden Years

1) What does Adrian Mitchell say we do to people... Read More

Strategies on Paying for Nursing Home Care and Medicaid

The decision to place your loved one into a nursing... Read More

The Dryer Ate Your Underwear!

Q: My mom is in the early stages of dementia... Read More

Honey, Where Are The Car Keys?

Q: My mother is always losing, hiding and hoarding things,... Read More

What Most Long Term Care Professionals Don?t Know

Medicare recognizes this need and, therefore reimburses your residents to... Read More

Marketing, Selling, and Serving the Older Adult, Senior Citizens, Family Caregivers

Are your clients pleased by the fine quality service that... Read More

Hinged Rail Stair Lifts

If a door at the top or the bottom of... Read More

Respiratory Help Is Available For Seniors With COPD

As HMOs Continue to Drop Coverage for Seniors - Now... Read More

The Best Investment You Can Make Right Now: Long Term Care Insurance

Don't think you need it? Consider this: a full 50%... Read More

Long Term-Care; 70 Million Americans Will Be Over 65 by 2003

We will all grow old; this is a given. We... Read More

Prepare to Make Long-term Care Choices

Several months ago, I was coming out of a gas... Read More

Senior Care for Alzheimer?s

As a person ages, a certain amount of memory loss... Read More

Why Everyone Over 50 Should be Training for the Senior Games

by Phil Campbell, M.S., M.A., FACHE Senior Games participant and... Read More

The Truth About Christmas

Every year, as Christmas approaches, you hear Christmas carols everywhere.... Read More

Prevent or Delay Alzheimers Disease

Argh! Where are my glasses? I put them down .... Read More

Stair Lifts - Straight and Curved Rails

There are two types of stairlift. Straight and curved. The... Read More

Helping Caregivers Get Comfortable Asking For Help

Becoming a care giver might not have been a conscious... Read More